Livestock Analysis (VIP) -- February 25, 2013

February 25, 2013 09:11 AM
 

Hogs

Price action: Lean hog futures were choppy today and ended with a mixed tone. Futures closed 25 cents higher to $1.10 lower.

Fundamental analysis: Friday's Cold Storage Report showed pork stocks in frozen storage at the end of January just below expectations, but still up 3.4% from year-ago levels. The build in stocks compared to year-ago keeps demand concerns on traders' minds. Meanwhile, the cash hog market was 50 cents to as much as $1.50 lower today on light demand. Packers say that despite much-improved profit margins, they are having no difficulty securing supplies, which keeps them from raising bids.

April lean hog futures are trading at less than a dollar discount to the cash index, but futures remain severely oversold according to the 9-day Relative Strength Index. This signals a time or price correction is due.

Technical analysis: April lean hog futures gapped slightly lower on the open and extended losses but posted a high-range close. Today's low of $80.90 is initial support. Futures need to return to above the September low of $84.07 1/2 to signal a near-term low has been posted.

Hedgers: Carry all risk in the cash market for now.

Feed needs: Profits have been claimed on 1st-qtr. feed coverage that was held in March corn and meal futures. 25% of 2nd-qtr. corn needs are covered in long July corn futures at $6.78 3/4 and 25% of 2nd-qtr. protein needs are covered in long July soymeal futures at $388.00.

 

 

Live cattle

Price action: Live cattle futures got off to a firmer start, with nearby contracts gapping higher on the open. But buying interest dried up and futures ended mixed for the day.

Fundamental analysis: Nearby contracts saw an early boost thanks to Friday's Cattle on Feed Report that showed Placements and Marketings above year-ago levels and On Feed down from last year. This encouraged bull spreading. Nearby contracts also benefited from concerns about stressful weather conditions across the Central and Southern Plains. But strength in the U.S. dollar index and demand uncertainty limited gains today.

Technical analysis: April live cattle futures settled mid-range with slight gains for the day after seeing two-sided trade during today's session. Initial resistance remains at the double-bottom January low of $129.45, while strong support is at last week's low of $127.50.

 

Feeder cattle

Price action: Feeder cattle futures ventured into positive territory today, but futures ultimately settled low-range and steady to 45 cents lower for the day.

Fundamental analysis: Feeder cattle futures continue to struggle to attract buying interest despite the technically oversold condition of nearby contracts due to high feed costs and concerns about demand. Improvement in the corn market with the open of pit trading halted buying interest in the feeder cattle market.

Technical analysis: Near-term support for March feeder cattle futures remains layered from the psychological $140.00 mark to the contract low of $139.50. The contract needs closes above the January low of $144.65 to signal a low is in place.

Hedgers: Fed cattle producers should carry all risk in the cash market for now. Feeder cattle sellers and buyers should also carry all risk in the cash market for now, but feeder cattle buyers should stay in touch to establish long coverage.

Feed needs: Profits have been claimed on 1st-qtr. feed coverage that was held in March corn and meal futures. 25% of 2nd-qtr. corn needs are covered in long July corn futures at $6.78 3/4 and 25% of 2nd-qtr. protein needs are covered in long July soymeal futures at $388.00.

 

Back to news


Comments

 
Spell Check

No comments have been posted to this News Article

Corn College TV Education Series

2014_Team_Shot_with_Logo

Get nearly 8 hours of educational video with Farm Journal's top agronomists. Produced in the field and neatly organized by topic, from spring prep to post-harvest. Order now!

Markets

Market Data provided by QTInfo.com
Brought to you by Beyer
Close